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Electronics Production | September 23, 2009

EC approves €54.5 million investment aid to Dell plant in Łódź, Poland

The European Commission has authorised, under EC Treaty state aid rules, €54.5 million of regional aid, which the Polish authorities intend to grant to Dell Products Poland for the establishment of a manufacturing plant in Łódź (Poland).
In December 2008, the Commission opened a formal investigation as it had doubts about the compatibility of the aid with the rules on regional aid for large investment projects. Following an in-depth assessment, the Commission has concluded that the investment project will significantly contribute to the regional development of the Łódzkie region and that these benefits outweigh any potential negative effects of the aid on competition and trade.

Competition Commissioner Neelie Kroes said: “Our assessment shows that the project’s contribution to regional development and job creation in a disadvantaged region of Poland outweighs any potential negative effects. For cases like this, which could present a high risk of distorting competition and where job losses in other Member States have been pointed to, we need to conduct a detailed economic analysis of the market and of the impact of the aid before taking a decision."

Dell Products Poland Sp.z o.o., a company wholly owned by Dell Inc. of the US, built a plant for the production of desktops, notebooks and servers which is expected to create up to 3 000 direct jobs in the Łódzkie region. The investment costs taken into account for the calculation of the aid are €189.58 million and the planned aid amount is €54.5 million. The manufacturing plant was opened in January 2008 and currently employs 1 700 workers.

Regarding the negative effects of the aid, the Commission found that the aid would not cause the crowding-out of competitors or the creation of significant production capacity in an underperforming market (desktops) since it has been demonstrated that the plant would have been built in any event, regardless of the aid, albeit in a different location. For the same reason, the Commission also concluded that job losses at other locations in the EU, such as those that result from Dell’s decision to close its manufacturing facility in Ireland, are not a consequence of the aid granted by the Polish authorities.
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